ECON 1P92 Lecture Notes - Aggregate Demand, Aggregate Supply, Demand Shock

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ECON 1P92 Full Course Notes
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ECON 1P92 Full Course Notes
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Chapter 23: output and prices in the short run. Shocks and price changes: exogenous changes in price level- demand side changes, supply side changes- factor prices, macro equilibrium- demand, supply and price level. Increase in p reduces the real value of money [in private sector: exogenous change in price level, p. Fall in p raises the real value of money holdings. Change in p affect wealth of bondholders and bond issuers [offset each other- no change in aggregate wealth] Prices rise in canada- foreign prices are constant. Conversely for a fall in canada"s prices. Reduces equilibrium level of real gdp (y) Relates equilibrium real gdp to the price level. Ad curve shows level of real gdp where desired aggregate expenditure equals actual gdp. Changes in p shown by movements along aggregate demand curve. When price is lower, buy more only applies to one good. Apples cheaper, so buy more apple and fewer bananas]

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